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In the following diagram you are given two technologies, A and B, which can produce 100 metres of cloth. Technology A uses 1 worker and 4 tonnes of coal, while technology B uses 4 workers and 2 tonnes of coal. The diagram also depicts three examples of isocosts, NM, GF and JH. The wage cost and the price of coal are denoted by w and p. respectively. Which of the following statements is correct?

In the following diagram you are given two technologies, A and B, which can produce 100 metres of cloth. Technology A uses 1 worker and 4 tonnes of coal, while technology B uses 4 workers and 2 tonnes of coal. The diagram also depicts three examples of isocosts, NM, GF and JH. The wage cost and the price of coal are denoted by w and p. respectively. Which of the following statements is correct?

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter25: The Supply Of And Demand For Productive Resources
Section: Chapter Questions
Problem 9CQ
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In the following diagram you are given two technologies, A and B, which can produce 100 metres of cloth. Technology A uses 1 worker and 4 tonnes of coal, while technology B uses 4 workers and 2 tonnes of coal. The diagram also depicts three examples of isocosts, NM, GF and JH. The wage cost and the price of coal are denoted by w and p. respectively. Which of the following statements is correct? Tonnes of coal 10 9 00 D S M 4 Number of workers 3 When w- $20 and p- $10, the cost of using technology A is $60. Isocost JH corresponds to the case where the w- $20 and p = $10. The cost of using technology B is the same for both isocost JH and isocost GF. Isocost NM is the only one of the three isocosts depicted which corresponds to the case where w- $20 and p = $10.
Transcribed Image Text:In the following diagram you are given two technologies, A and B, which can produce 100 metres of cloth. Technology A uses 1 worker and 4 tonnes of coal, while technology B uses 4 workers and 2 tonnes of coal. The diagram also depicts three examples of isocosts, NM, GF and JH. The wage cost and the price of coal are denoted by w and p. respectively. Which of the following statements is correct? Tonnes of coal 10 9 00 D S M 4 Number of workers 3 When w- $20 and p- $10, the cost of using technology A is $60. Isocost JH corresponds to the case where the w- $20 and p = $10. The cost of using technology B is the same for both isocost JH and isocost GF. Isocost NM is the only one of the three isocosts depicted which corresponds to the case where w- $20 and p = $10.
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